Young Entrepreneurs: The 5 Stages of Growth

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Transcript of Young Entrepreneurs: The 5 Stages of Growth

Hilary MuthJessica McCulloughEmily EnnettKristen Greene Young Entrepreneurs: The 5 Stages of Growth Facts 5 Phases of Growth Growth Stages Introducing Bradyn McCullough • Owner, currently 26 years old• Formally worked in a serving position at restaurants, and as an irrigation technician in the summers for another irrigation company• Started the business at age 20, currently pursuing a business degree while running Grizzly Irrigation Introducing Grizzly Irrigation • Small Business• 6.5 years old• Number of employees (as high as 7 technicians)• Competitive Advantage: Customer Satisfaction & Environmental Sustainability• Undergone considerable growth since its formation in 2006 Interview Q & A’s: Grizzly Irrigation & Growth 1 Why did you become an entrepreneur at such a young age? • Lack of other opportunities that allowed for flexibility in lifestyle• “Pay the bills!” & Cost/Benefit• Motivated to obtain a degree without debt while capitalizing on the opportunity • Familiarity with Irrigation process 2 What were a few of the initial steps that you took to create Grizzly Irrigation? • Understanding the industry & Creating a business plan• Registering, applying for business license, accumulation of funds to purchase required materials • Relative financial plan 3 Was it a challenge to raise capital? • Not too difficult, required inputs are relatively low in the industry to formulate a company 4 Why did you decide to enter the contracting industry? Do you plan to continue to retain ownership of the firm, or rather, will you consider selling your company in the future? • Enjoyed the environment, recognition of economic factors , permission to study another firm’s business plan• Dream job, loves the flexibility & perks of ownership 5 Do you believe that your company has experienced growth? How do you measure growth? How have you seen growth? Do you have now, or will you have shortly,the systems in place to handle the needs of a larger, more diversified company? • Yes, Grizzly Irrigation has experienced growth• Growth is measured by: # of contracts, size of contracts, demand for employees (Do I need more people to work for me?), hours of “core guys,” greater demand for customer service dimensions 6 Can you delegate? Do you think that you would have an issue with decentralization? In what ways would you expand your company? • Yes I can delegate, ideally, I’d like to be able to pass on some of my responsibilities to employees- issue lies in the supply of quality employees with ability to take on responsibilities• Opportunity for employees to step up to the plate (experimentation, reaction) 7 What do you believe to be the advantages and disadvantages of being a young entrepreneur? • Energy level, eagerness to learn, ability to relate to a younger crowd, solution & innovation driven, patience, desire to please• Trust aspect, inexperience 8 Do you have enough cash and borrowing power along with the inclination to risk everything to pursue rapid growth? Or instead, do you prefer to savour some of the benefits of success? • Feels that he never has enough capital to ease hesitance with risk taking-not comfortable with acquiring substantial debt 9 • Desire to grow, but working on becoming comfortable with risking it all Do you think that the stages: Existence, Survival, Success, Take-off & Resource Maturity represent the stages of small business growth correctly? Which stage would you currently place your firm? Good representation Between the Survival & SuccessLabour MarketRevenue Margins Stage One: Existence Stage Two: Survival Stage Three: Success Stage Four: Stage Five: The Five Stages of Development Existence Survival Success Resource Maturity Take Off 9% of SMEs in Canada were owned by young entrepreneurs in 2000Young Entrepreneurs are found in all sectors of the economy - particularly knowledge-based industriesBusinesses owned by youth are more likely to be high-growth and financially viableAccess to financing is the most common obstacle for young entrepreneurs “the world they fantasize about ultimately getting to, the world they’re in, and the world they’re getting to — the world that is the next step.” 1. They assume that a company must grow and pass through all stages of development or die in the attempt2. The models fail to capture the important stages in a company’s origin and growth3. The framework characterize company size largely in terms of annual sales This framework is inappropriate for small businesses on at least three counts: Can we get enough Customers?Do we have enough money to cover the considerable cash demands?The owner does everything and directly supervises subordinatesThe company’s strategy is simply to remain alive The business has demonstrated that it is a workable business entity It has enough customers and satisfies them sufficiently with the product or services to keep themRelationship between revenues and expensesCan the company generate enough cash to break even and to cover the repair of assets?Can we generate enough cash to stay in business and to finance growth? The owner needs to answer the following:Should we exploit the company’s accomplishments and expand or keep the company stable and profitableFunctional managers take over some of the owner’s dutiesCash is plentiful As the business grows and matures it becomes less apart of the owner Take-Off How to grow rapidly and how to finance that growthDelegationCashThe organization is decentralized and at least in part divisionalized Managers need to competentThe owner faces a challenge of his or her own ability Resource Maturity Consolidate and control the financial gainsMaintain Entrepreneurial SpiritExpand management Companies have staff and financial resources to engage in detailed operational and strategic planningManagement is decentralized adequately staffed and experiencedThe owner and the business are separate and independent both financially and operationally Characteristics of each stage SizeDiversityComplexityManagerial styleOrganizational structureExtent of formal systemsMajor strategic goalsOwner's involvement in the business How do Young Entrepreneurs Finance? • Bootstrapping• Friends and Family• Small Business Grants• Loans or lines-of-credit• Start-up incubators• Angel investors Seth Rutner • Company name: Student Frontier Group• Product: New Era 59FIFTY fitted hats branded with StFX colours and logos• Finance: Bootstrapping• Advantages: Surrounded by and in touch with current fashions and trends.• Disadvantages: People don't take you seriously • Risk: Getting too involved and letting your studies suffer.• Profit and Sales: approximately 8K in revenue• Methods used: Market surveys, met with retailers, marketing through word-of-mouth, and advertising by wearing the product. Questions? Thank you! Conclusions Agenda Statistics5 Stages of GrowthFinancingSeth Rutner - Student Frontier GroupBradyn McCullough - Grizzly IrrigationConclusions Being a young entrepreneur is becoming an increasingly popular career optionThe 5 Stages of Growth model is a good representationFinancing as an obstacle